Fed’s Kocherlakota Sounds More Dovish Tone

A Federal Reserve official on Thursday proposed that as long as inflation remains in check, the central bank shouldn’t raise rates until there’s been a very substantial fall in unemployment.

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota described a monetary-policy regime would potentially leave short-term rates at effectively zero percent for years to come, most likely longer than the mid-2015 date central bankers currently suggest could bring the first increase in interest rates.

“As long as the FOMC is continuing to satisfy its price stability mandate, it should keep the Fed funds rate extraordinarily low until the unemployment rate has fallen below 5.5%,” Mr. Kocherlakota said.